Education trap threatens Panama's economic boom

CUCUNATI, Panama (Reuters) - Carlos Bacorizo begins a half-hour jungle trek to school every day not knowing if he'll make it to class. An oft-swollen river blocks his path.

Even if he crosses the 165-foot-wide (50-meter-wide) river -- sometimes with books, shoes and uniform balanced on his head -- all he gets is one of the worst educations in the world.

"Sometimes when it's high, we have to cross in our underwear," said Bacorizo, 14. "It's dangerous."

Many Latin American countries struggle with poor schools -- but none combine greater wealth than several European nations and almost double-digit economic growth with one of the worst education systems in the world. Except Panama.

A global crossroads with 4 percent of global trade moving through its canal, Latin America's two busiest ports and a communications and financial infrastructure that draws global investors, Panama is running out of skilled workers.

Decades of poor schooling has created the problem which business experts say could soon slam the brakes on growth.

"Instead of growing 6-7 percent per year, we could grow 4-5 percent per year," said Nicolas Ardito Barletta, a former president who runs the National Center for Competitiveness.

Panama, whose per capita gross domestic product in 2010 was $7,600 -- beating the likes of Romania, Bulgaria and Serbia, International Monetary Fund data show -- is expected to see economic expansion of some 9 percent in 2011.

Growth is seen slowing to around 7 percent thereafter, but that target will be in jeopardy if Panama cannot fill some 90,000 skilled jobs in coming years, Barletta says.

Heavy infrastructure spending -- like the $5.25 billion expansion of the Panama Canal -- along with revenues from ports, banks and free zone commerce have powered the economy, 80 percent of which is based on services.

The whole service sector is now exposed to the tight labor market, said Felipe Chapman, a director at financial services firm Indesa. He frets over the need for education reform.

"Yesterday was too late," he said.

Out of 139 nations, Panama's primary education ranks 129, according to the World Economic Forum's "Global Competitiveness Report" for 2010-2011. Its higher education is ranked 128.

Fixing the problem will determine whether the Central American isthmus nation becomes a high-income country that its leaders dream of or stagnates at middle-income, Chapman added.

"The lack of skilled labor obligates businesses to bring in foreign labor, which is more costly for them and of little benefit for our country," said Raul Aleman, chief executive officer of Banco General, Panama's biggest local bank.

In 2009, U.S. giant General Electric opted for Chile over Panama for a project local media said would have required up to 1,500 English-speaking engineers and computer experts.

CINDERELLA

Panama's fast-growing tourism industry is most immediately threatened. Thousands of new hotel rooms are due for completion in coming years and hoteliers fret over filling jobs.

The educational prospects for schoolboy Bacorizo are threatened by much more than a river. Cucunati's electrical plant usually runs at night, leaving the computer lab dark by day, and the closest senior high school is at least 3 hours from his rural home.

Schools in the bustling skyscraper capital of Panama City are little better. Children cram into creaky wooden seats in sweltering run-down classrooms that are often mere staging posts for the many teenagers who drift into drug running and other crimes.

Teachers regularly strike. Recently, they held a two-day stoppage to oppose the government's bid to reform a high school curriculum that has barely changed since the 1970s.

"Every kind of study always puts us last," said Elizabeth Petrovich de Molina, a University of Panama education expert. "We are behind by more than 30 years.

Petrovich points to two major problems: every 5-year administration tackles education's pitfalls from scratch -- if it bothers at all -- then union opposition crushes reform.

Yet opposition could be waning. Despite strikes, 90 percent of teachers handling the new curriculum went to a recent training session, said Petrovich, suggesting President Ricardo Martinelli's education reform efforts might outlast his term.

For the first time, the government has asked the University of Panama to help. And private sector support is rising.

Schools are being better equipped under the reform, which focuses on skills needed for tourism and technology, as well as providing greater emphasis on languages, math and science.

Money has not always helped though.

The IMF says Panama spends more on education than Chile -- yet on the World Economic Forum's higher education ranking it is still nearly 30 places below a Latin American peer where students protesting for improvements have plunged Chile's government into crisis.

Much of the funding simply goes to waste.

Wedged next to a five star resort near the Pacific mouth of the Panama canal, the Cosecha Amistad is one school recently kitted out with a smart air-conditioned computer lab.

But it hasn't had Internet since thieves stole the main cable line three months ago. That didn't stop technicians from the service provider coming to fix the problem in August, unaware the cable had gone. They left shaking their heads.

In Cucunati, locals want a bridge. A budget has been approved but officials in the area say it is not enough.

"The focus the government puts on infrastructure worries me," said Jesus Cedeno, a local pastor. "Because we're always left until the end, like the Cinderella of the country."